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Supply and Demand
Transcript of Supply and Demand
are more willing to supply more of their product and vise-versa. So, if the Red Rock Deli chips in our canteen went up a dollar or two, their company would be able to make and supply more of their chips to us. In economics, the Law of Demand states that consumers will buy more of a good when it's price is low and less when it's price is high. For example: if the Red Rock Deli Chips in our canteen were $1 each, then more people will buy them than if they were $3 each. In other words: if a product is cheap, more people will want to buy it and if it is expensive, then less people will want to buy it. Price Quantity 100 200 300 400 500 10 20 30 40 50 Supply Demand Equilibrium Surplus Shortage There are many factors which can cause the demand curve to shift. Two examples are:
1. The paint store that supplies our school with paints is caught for putting harmful ingredients in their products; our demand for their paints will go down because we don't to use paints with harmful ingredients.
Due to this decrease in demand, the equilibrium price has lowered. S D D1 There are also many factors that can effect the supply curve:
1.There is a strike at a major paper company and 3/4 of all the workers are participating. Due to this, The supply of paper that gets sent to our school is reduced because there are less workers at their factory to make the paper..
Due to this decrease in supply, the equilibrium price will rise. 2.It is now summer and because it is hot the demand for icy-poles - from our canteen - is increasing. Everyone wants a nice, cold sweet to cool them down, so the the demand for them will go up.
Due to this increase in demand, the equilibrium price will rise. D S D1 S S1 D 2. It has been an excellent growing season for apples and watermelons, because of this, the supply of these two fruits have increased so we could potentially have more apples and watermelons to sell in our canteen.
Due to this increase in supply, the equilibrium price will go down. D S S1 Surplus means low demand and high supply.
If the price of tennis racquets went up $20 to $50 each then not many people would want to buy them - demand lowers - but because of the high price, companies are willing to make more tennis racquets for stores, leaving them in a surplus. This means they have a high supply of tennis racquets but a low demand for them. D S $50 $30 $10 Surplus and Shortage Surplus Shortage is when there is high demand and low supply
When the price for tennis racquets go down to $10 each, more people will want to buy them because they are cheaper. Due to this, the company producing the tennis racquets aren't getting much profit (because of the cheap price), so they won't be willing to supply many tennis racquets to stores. $50 $30 $10 Shortage S D Thank-you E E1 E E1 E E1 Labeled Supply and Demand Curve